Copycats - industry must take action

16th of March 2011

Senior figures from the cleaning industry gathered in Amsterdam recently to discuss the increasingly widespread problem of ‘copycat’ products entering the European market. The meeting was hosted by European Cleaning Journal and Amsterdam RAI.

The subject of intellectual property (IP) violation has been highlighted by a number of the industry’s leading manufacturers, with many of them having experienced their products being copied by companies outside of Europe – most often in China. Legally, the issue is extremely complex, however there is a feeling among manufacturers that they would like to see a more proactive approach from exhibition organisers and associations. In September 2010 ECJ ran an article highlighting the key issues and demonstrating the strength of feeling among manufacturers.

It is often through trade exhibitions that counterfeit manufacturers attempt to enter new markets and the subject of preventing such companies from entering shows in Europe needs to be addressed – along with the wider situation that is developing. So ECJ invited a representative group to meet, share their experiences and suggest possible ways of making some progress. The meeting took place last month at Amsterdam RAI.

IP lawyer Marc de Kemp of Houthoff Buruma began by giving an overview of the legal position of both exhibitors and exhibition organisers when infringements take place at a trade show. He stressed IP rights have become more and more important to companies in recent years, and they now have to do more to protect them.

Offering advice to companies exhibiting at international trade shows, de Kemp pointed out that they must fight their cases in the market where counterfeiting is taking place. He advised firms to register rights in the country where they’re exhibiting, and to take evidence of those rights to the show. "In the Netherlands, as in other countries, it’s also possible to inform customs about any exhibiting companies you suspect of infringing your IP rights and they will carry out searches at airports and ports. Then you have a 10 day period to go and see those products for yourself. Last year 80 per cent of products stopped in the Netherlands were destroyed so this can be a useful tool."

De Kemp also suggested informing the show organiser before the event that a suspected copycat product will be exhibited. The organiser can then send a letter to the infringing party, warning them not to show certain products. "If you are at a show and are actually confronted with a counterfeit product," he continued, "you can start ex parte injunction proceedings, which are now harmonised across the EU. To do that you file a request with the district court and make it aware of your rights in that country. The court will then give a court order without hearing the infringing party, and that can be done in one day."

Discourage counterfeit companies

"And under EU law of IP infringement, the loser pays. That also can discourage counterfeiting companies from exhibiting."

What about the role of the exhibition organiser? According to law, a show organiser cannot actually take action against a company – only the right holders can do that. "Show organisers can help by providing lists of IP lawyers and advice on how the legal system in their country works," de Kemp explained, "but they are very limited on what they can do legally."

"The legal side of the matter is one thing," argued Markus Asch of Kärcher and European machine manufacturers' trade association EUnited, "but the exhibition organiser has a responsibility to lay down rules."

Peter Hug from EUnited spoke about the counterfeiting problem from its point of view and referred to a survey carried out in Germany on the subject. The survey covered companies outside of the cleaning sector but it showed that over half of counterfeit products are detected at trade fairs.

He suggested though, that rather than focusing purely on exhibitions, manufacturers could be more proactive in sending a positive PR message to the industry as a whole - publicising the advantages of buying machines and other products from the original manufacturer, such as service and support.

The participants then heard from Heike Hemmer from Messe Berlin, which organises CMS, who explained her policy is to focus on prevention in order to avoid conflict at the shows themselves. Messe Berlin has strongly worded terms and conditions which cover counterfeiting and at shows themselves they offer back-up and help desks to exhibitors encountering problems. It has compiled a dedicated document - Intellectual Property and Licenses - for exhibitors at all its trade shows, which contains contact details for the relevant authorities and lawyers.

Cost of protection

Toni D’Andrea is responsible for running the Afidamp cleaning products manufacturers' association along with the Pulire series of trade shows. He highlighted another pertinent point. "90 per cent of the products in the Italian cleaning industry are not covered by any type of IP protection. Cost is a major issue in obtaining patents, with extra fees in each country. So we find this situation is particularly prevalent with low complexity, low technology products." He emphasised that the problem cannot be entirely solved by telling companies to obtain the right patents and protection, because they simply cannot afford to do it. "That’s where I believe trade associations and trade show organisers should help to protect such businesses."

In his role as an exhibition organiser D'Andrea also strongly feels he should have the power to take action against counterfeiting companies. "We always try to prevent copycat products from entering our shows," he stressed. "Our exhibitors spend a great deal of money on their stand and we should try to follow the rules." The sentiment around the table among the manufacturers, however, was that they often feel helpless when they try to take action at exhibitions.

The manufacturers attending then shared their own experiences and all of them had encountered piracy in some form. Comac’s Giampaolo Ruffo summed it up when he said: "This problem has gone well beyond our expectations. There are now 21 companies copying Comac machines - the situation has gone out of control as far as we’re concerned. But for the user, it’s often a simple choice between a 1,000 euros original machine or a 100 euros copy."

Dirk Salmon of Vermop Salmon recounted how one of his company’s products was copied by a US company and exhibited at ISSA/INTERCLEAN in Amsterdam last year - China is not the only source of offending companies. "The problem we have encountered is that the cost of the patent is so high in different countries. And then actually fighting your case in other countries is almost impossible, and certainly extremely expensive."

"The key issue manufacturers have to focus on," added Keith Baker of industry association ISSA Europe, "is where the damage is, how much the damage is and what is the risk of defending the situation - and of course the cost."

Kärcher has experienced various instances of copyright infringement on its wide range of products and Markus Asch spoke about one case of a Chinese business that made a copy of a Kärcher machine, and won the IP rights in China. Kärcher naturally fought this decision in the courts - and, astonishingly, lost the case. Now the matter has to go to the next level of legal action but as he pointed out: "Chinese and European IP rights are similar on paper but actually engaging in the legal process is a whole different challenge."

He stressed: "A new wave of companies is coming, they are trying to sell in Europe and there are more of them doing it."

The focus of the meeting then turned to possible action the cleaning sector in Europe can take as a whole to tackle this growing IP infringement challenge. When asked how associations could be more helpful ISSA's Keith Baker replied: "We always have the interests of our members in mind and ISSA has developed a section of our website dedicated to IPR. But it’s difficult for us as a trade association to implement actions without legal back-up and standing."

Fight at local level

He believes: "Support at government level is key, and as an industry we must tell governments exactly what is going on. Perhaps the trade associations are in a position to do that?" Giampaolo Ruffo had explained that the Italian government had been approached about the problems the cleaning industry is facing, but without success.

Markus Asch disagrees that governments can be relied upon to take action. "If we want to fight our battle through governments, it’s an uphill struggle," he said. "My opinion is that we must fight this at a local level where the infringements are made. At Kärcher we have taken legal action in China, for example, and sacked dealers who we found were buying counterfeit machines.

"In the past we have all been guilty of not protecting ourselves properly through IP rights," he went on. "It’s expensive, but we must recognise that otherwise our technology becomes a commodity. We must build our brands and the other services around the product. Then we have to make it clear to companies entering the European market that IP rights are crucial, and it must also be made clear what will happen if those regulations are infringed."

Cost is clearly a significant obstacle when fighting piracy cases, particularly for smaller companies. Matthew Dwelly of Brightwell Dispensers confirmed this. "We are a small manufacturer and for us to pursue a case has a great impact on our business."

Markus Asch agreed. "Trade shows are still the main route to market for counterfeiting companies," he said. "And I believe exhibition organisers have a responsibility to help smaller manufacturers that don’t have the resources to fight infringements."

In summing up, while it was agreed that there does need to be more awareness of the IP infringement issue among European end users and distributors, it's at exhibitions where manufacturers would like to see more decisive action being taken. One of the ideas put forward was for show organisers to commit to evaluation of all products being displayed at shows in advance, by an independent committee.

This means exhibitors would have to submit details of all products they planned to show, and if there were any doubts about IP rights that particular product would not be allowed.

Could that product then be banned from all other major shows in Europe? This would require a joint agreement between show organisers, and all three of them present have agreed to discuss this possibility. Further meetings will take place, and ECJ will keep the industry informed of developments as they happen.

"This is not just about what’s happening today, we must look to the future and how this situation will inevitably escalate if we do not take action now," Markus Asch concluded.